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Perspectives from New Institutional Economics

Edited by Claude Ménard

This outstanding book presents new original contributions from some of the world’s leading economists including Ronald Coase, Douglass C. North, Masahiko Aoki, Oliver E. Williamson and Harold Demsetz. It demonstrates the extent and depth of the New Institutional Economics research programme which is having a worldwide impact on the economics profession.

Chapter 23: Asset specificity, work organization and mode of command: first insights from the automotive industry

Monograph Chapter

Extract

Asset speciﬁcity, work organization and mode of command 349 23. Asset speciﬁcity, work organization and mode of command: ﬁrst insights from the automotive industry Didier Chabaud* INTRODUCTION Williamson (1991) describes organizations (called ‘hierarchies’) as permitting cooperative adaptation. In the presence of asset speciﬁcity, they are perceived as more efﬁcient than other governance structures (hybrids and market). This ‘comparative advantage’ stems from the ability of hierarchy to cope simultaneously with bounded rationality and opportunism of agents (Williamson 1975, 1985, 1996a). However, it is not clear whether transaction cost theory (TCT) can analyse internal structures of the ﬁrm correctly. Some scholars argue that the focus of TCT on opportunism and hierarchical relationships prevents it from ‘thinking employee involvement’ (Pfeffer 1994) and ‘horizontal coordination’ (Aoki 1988), and even that it can be ‘bad for practice’ (Ghoshal and Moran 1996). In this chapter, we want to show that TCT is able to analyse accurately the organization of work and its modes of command. Recent studies have been developed that relay transaction cost theory to internal structures of the ﬁrm. Suzuki (1991) applies this approach in historical analysis to show the emergence of the Japanese way of organizing, whereas Ménard (1996 and 1997) provides some refutable insights into the connection between organization form and the attributes of internal transactions. We extend these studies to analyse work organization. For this purpose, we retain the hypothesis that asset speciﬁcity determines the characteristics of work organization. More speciﬁcally, we shall insist...

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